Barclays sells $12bn of risky assets

[CHIMO]

Source: guardian.co.uk

Two top bankers are leaving Barclays to manage a fund in the Cayman Islands that is buying $12.3bn (£7.47bn) of the bank's most troublesome assets.

The deal was criticised by analysts who questioned its complexity, but it will enable the British bank to report a more stable performance in future. Throughout the financial crisis, Barclays has been forced to defend the way it was pricing and accounting for these troublesome assets and is now hoping to smooth out the effect of the investments on its profits.

The assets will not actually be removed from the bank's balance sheet for regulatory purposes but the accounting treatment will be changed, allowing Barclays to avoid taking further big hits by no longer needing to price its assets at current market values through the convention known as "mark to market".

Under the deal terms , Stephen King and Michael Keeley will set up C12 Capital Management which, while based in New York, will manage the new Cayman Islands-registered fund Protium and buy the assets from Barclays.



Read more: http://www.guardian.co.uk/business/2009/sep/16/barclays-sells-credit-assets

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Sounds to me like exponential leverage. But we don't have to worry. Corporations are backed by our governments.

[bemildred]

1. You gotta wonder what is going on under the table?

That's the thing about these "complex" deals.

[DCKit]

2. Seriously. How can you sell an asset, yet still have it on your books?

Something here really stinks.

I'm thinking it's just another scam to privatize the potential profit, but socialize the risk. Some how, some way, the people are backing this venture - and boy, are they going to be pissed when it comes out.

[truedelphi]

3. The 20% of the Democratic party that are loyal

To anything, will not get pissed until the FINAL COLLAPSE occurs. Which could be in two weeks or three years.

But really. can a jobless economy, in a world economy that depends on consumer spending, actually sustain itself? Right now, all that is going on is that the Massive Capital Giveaway, er BailOut Trillions may well be propping up companies, some of them to record levels.

For instance, Goldman Sachs is doing great.

[DCKit]

4. Barclay's is a British bank. The people will go all Hooligan on their asses. n/t

[truedelphi]

7. After I saw this point, I watched a segment on the Money Channel and the head of Barclays was on

Where the head of Barclays was interviewed and talked about how wonderful their firm buying out Lehman Bros ahs been.

There is always this deliberate slanting of the Corporate News, isn't there? And I was thinking while watching this - Just how inside the government made such a pleasant and happy deal for Barclay's on this? I don't remember the valuation of Lehman's, but it was a real bargain.

[DCKit]

8. $25 million - The skyscraper that went with the business was worth 2x that. n/t

[truedelphi]

9. Thanks for the info. We will probably never know which

Insider helped put this deal toghether, will we?

But just like the government did not favor Wells Fargo's purchasing Wachovia, so someone in the Bush Administration must have been very friendly with someone at BArclays.

[Frank Booth]

5. They should have named the new fund JEDI or Chewco.

[Prometheus Bound]

6. OK, so they need a 12.6B loan plus .45B capital to buy 12.B assets before discount.

Surely they wouldn't have paid more than 10 cents on the dollar for them, so why the monster loan?